The Bank of Canada raised short-term borrowing costs Wednesday and left the door open to further tightening as economic growth remains relatively strong and as uncertainty around US trade policy eases.

The central bank increased its benchmark interest rate by 25 basis points to 1.75% and signaled a neutral stance was necessary to achieve the inflation target. The move was in line with expectations and marks the fifth increase since the summer of 2017.

"In determining the appropriate pace of rate increases, Governing Council will continue to take into account how the economy is adjusting to higher interest rates, given the elevated level of household debt," BOC said in a press release.

Canada’s economy has been growing steadily, with gross domestic product accelerating in the second quarter at the fastest pace in a year, and is expected to continue to pick up.

Noting a trade deal Ottawa reached with the US and Mexico last month, the BOC made upward revisions to business investment and export projections. The new agreement paved the way for an end to year-long NAFTA tensions that had raised outlook concerns.

"The risk of a significant increase in trade tensions with the US, such as the US withdrawing from NAFTA or imposing auto tariffs on Canada, has been all-but eliminated," Paul Ashworth, chief North America economist at Capital Economics, wrote in a research note.

The central bank had cited trade uncertainty when it held rates steady in September, saying it was "closely monitoring" the course of negotiations and their impact on the inflation outlook.

With BOC officials emphasizing a gradual and data-dependent approach to monetary policy in recent speeches, economists are eyeing another increase in January and three more throughout the rest of 2019.

But analysts at Bank of America Merrill Lynch said the BOC could move more quickly than expected as headline inflation remains above target and as the Federal Reserve continues tightening.

"Stronger activity will put more pressure on prices, leading the BOC to pick up the pace of hikes," the analysts said.

As the US economy hums along, Federal Reserve officials have discussed moving toward slightly restrictive interest rates. The central bank has increased rates three times this year and eight times since the financial crisis.

The Canadian dollar rose 0.65% against the greenback following the policy announcement.